Yes, your savings in Digit are covered by FDIC insurance.
Some of the money that Digit saves for users may be held in a custodial account called an “Omnibus Account”. Through something called the “Deposit Network Service,” funds from the Omnibus Account may also be divided and placed in custodial accounts at FDIC-insured banks (“Network Banks”). FDIC insures deposits so that you do not lose all the money in case the bank fails.
Good news: money held in one of these banks on your behalf is eligible for FDIC insurance as well, but some limitations may apply.
For example, FDIC imposes a limit on how much deposit insurance it provides. Currently, the limit is set at $250,000 for all funds that belong to the same person at each bank. If you already have deposited at one Network Bank, the FDIC insurance limit would apply to the total of your share of funds in the Omnibus Account held at that Network Bank and any additional funds you hold at that Network Bank outside of your Digit account; if the total is more than the FDIC limit, the excess may not be insured. Also, you may need to provide certain personal information within a specific deadline to make a claim for FDIC insurance payment if a Network Bank fails.
Keep in mind that Digit Investing and Digit Retirement accounts are not covered by FDIC insurance. These accounts are protected by SIPC. Learn more here: How are the funds in Digit Investing and Digit Retirement accounts protected?